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REPORT OF THE LAST WEEK (from 22/07/13 to 26/07/13) 

by Dario Galluccio

West Africa: Sifca invests $417 Million for palm-oil expansion

Sifca Group, which owns Africa’s biggest palm-oil refinery located in Ivory Coast, plans to spend $417 million in the next five years on plantations and factories in Ghana, Nigeria and Liberia.

The company, which is also West Africa’s largest rubber producer, plans to boost palm-oil output 33 percent to 400,000 metric tons annually over the next four years.

Ghana: GTBank acquire 70% stake in Kenyan bank

Parent company of Guaranty Trust Bank (Ghana) Limited, Guaranty Trust Bank Plc has reached an agreement to acquire a 70 per cent stake in Kenya’s Fina Bank Limited for $100 million.

The new acquisition will increase the number of countries that GTBank has presence from seven to ten, since Fina Bank, headquartered in Kenya also operates in Rwanda through its 92 per cent owned subsidiary Fina Bank Rwanda Limited and in Uganda through its fully owned subsidiary Fina Bank (Uganda) Limited. GTBank currently operates in Ghana, The Gambia, Sierra Leone, Liberia, Cote D’Ivoire and the United Kingdom and the acquisition forms part of the bank’s strategy to increase its international footprints across Sub-Saharan Africa.

Ethiopia: Mines earn U.S. $593 Million revenues

The revenues of mines this year shows decrease by 61 million US dollar compared to earnings of same period last year. According to Sinkinesh Ijigu, Minister of Mines, the decrease is down to price of gold reduction in the global market, which causes companies in Ethiopia to hoard their gold mines.

Last fiscal year the country provided to the global market 12 thousand kilogram of gold, over 81 thousand tons of tantalum and over 25 thousand kilogram of gem stones among others.

Ghana: Stanford SEED West Africa Centre opens in Accra

The Stanford Institute for Innovation in Developing Economies (SEED) has opened its office in Accra. It is the first innovation centre in West Africa.

The Minister for Trade and Industry, Mr Haruna Iddrisu, expressed appreciation for the initiative undertaken by the Stanford Graduate School of Business, the alumni and foreign donors, noting that Ghana would be made a hub of private partnership investment, when the SEED project which primarily aimed to change lives and transform businesses in the country and the sub regions of West Africa took roots.

Central Africa: BEAC projects 6% growth rate in 2014-2016

The Monetary Policy Committee (CPM) of the Bank of Central African States (BEAC) is projecting a 6 per cent economic growth rate for the Central African Economic and Monetary Community (CEMAC) in 2014 to 2016. The Governor of BEAC, Lucas Abaga Nchama, who is also the Statutory President of the CPM made the disclosure last Friday July 19 during a press briefing that was preceded by the second ordinary session of the committee for 2013 at the BEAC’s headquarters in Yaounde.

The promising macroeconomic perspectives, Mr Abaga Nchama said, is based on the rhythm with which growth-induced projects are being executed in member countries. He said many giant projects in the mining, energy and infrastructure sectors are off the ground and raising hopes that upon completion, they would be able to fire the economies of the respective countries to boom.

Nigeria: State integrates infrastructure master plan to gulp U.S.$2.9 trillion

The federal government has said the implementation of a new blueprint on Nigeria Integrated Infrastructure Master Plan (NIIMP), would cost $2.9 trillion.

The Minister of National Planning, Dr. Shamsudeen Usman, stated the master plan had been designed to raise the nation’s stock of infrastructure from the current 35 to 40 per cent of Gross Domestic Product (GDP) to 70 per cent of GDP in 2043- that is, in 30 years. He also pointed out that according to the master plan, 48 per cent of the $2.9 billion would come from the private sector.

The NIIMP is a 30-year master plan for accelerating infrastructure development in the country. It focuses on core infrastructure, including energy (power and oil and gas), transport (roads, rail, ports and airports), housing, water and ICT. Other infrastructure classes include agriculture, mining, social infrastructure, vital registration and security.

The draft NIIMP contains a long term vision that sets the overall direction for the master plan and strategic objectives, such as per capita income and GDP growth. It also describes the overall investments required in infrastructure, over the next 30 years and contains a financing plan and sector and regional strategies, as well as a priority projects portfolio. As an actionable plan, the NIIMP also highlights enablers for implementation and an implementation plan.

East Africa: Delonex Energy will invest US$600 million

Delonex Energy Ltd, an energy sector company, plans to invest US$600 million in financing oil and gas projects in several African countries, including Mozambique.

One of the investment areas will be East Africa’s rift valley, which runs from the Red Sea through Ethiopia, Kenya, Uganda, Tanzania and Mozambique.

The main investor in this project is a consortium led by Warburg Pincus LLC, a private equity company, which previously financed Kosmos Energy allowing it to discover an oil field in Ghana.

Ghana: GPHA seeks 1.5 billion dollars for expansion

The Ghana Ports and Habours Authority, GPHA, requires $1.5 billion to expand the Tema Port.

The expansion, which is necessary to meet traffic growth, transshipment and transit demands will involve the dredging of the basin and access channel, construction of new break, dry and liquid bulk terminals and a new fruit container terminal among others. The proposed project is to be financed through commercial loans, government of Ghana funding and public-private partnership.

South Africa: Investec approves $813 million debt for renewables

Investec Bank Plc said it’s able to provide 8 billion rand ($813 million) in debt funding for clean-energy projects in South Africa as the country adds wind and solar output. The money would be used to finance plants in the nation’s third renewables bidding round.

South Africa, seeking to cut dependence on coal for power, intends to add 3,725 megawatts of renewable-energy capacity by the end of 2016 with five tenders. That may help state utility Eskom Holdings SOC Ltd. meet demand as it struggles to fund maintenance and expansion in the continent’s biggest economy. The second round attracted bids from Electricite de France SA (EDF), Tata Power Co. and Acciona SA (ANA). The deadline for submissions in the third is Aug. 19.

Investec has participated in about 20 billion rand of financing for South African clean-energy and renewable ventures so far, including 6.4 billion rand of debt.

Kenya: World Bank will finance Kenya, South Sudan road project

The World Bank has pledged to finance Kenya’s Lodwar-Nadapal link-road project to South Sudan, a key infrastructure that will boost trading activities between both nations.

In an official statement, the bank’s Lead Transport Specialist for Africa, Josephat Sasia, said the construction which is part of the Eldoret Napal 595-kilometre project embarked upon by the World Bank, will be administered by the Kenyan National Highways Authority as an initiative to improve Kenya’s infrastructure.

Sasai disclosed that the cost of the project is yet to be ascertained, pending the completion of designs – which is slated for September – but noted that the funds will be disbursed by the apex bank through its regional transport facilitation programme. He, also, expressed optimism over the quality and pace of infrastructural development in the country, stating that the economy stood a better chance of developing through infrastructural expansion.

Earlier this year, the World Bank partly funded a 960km stretch of road connecting the two East African states and has so far disbursed an estimated $1.2 billion for various infrastructural projects across the East African country.

Kenya: Boom for East Africa economy as Kenya removes roadblocks

The Kenyan government has removed roads blocks along its roads to Rwanda. The roadblocks have been a cause for delays when transporting goods to Rwanda. The presence of many traffic police officers in the over 25 roadblocks has also been linked to increasing bribery and other corrupt practices. The move is a boost to the East African common market which came into force in 1st July 2010. Known as The East African Protocol, the agreement was passed by heads of the five member countries; Kenya, Uganda, Tanzania, Burundi and Rwanda.

The removal of the roadblocks comes at a time when massive economic gains awaits the region with the discovery of oil deposits in Northern Kenya and Uganda. More gold deposits have also been discovered in Tanzania. Free flow of goods, labor, capital and services are some of the key pillars of a free market economy as envisaged in the East African Protocol.

Africa: Marriott, Starwood and Hilton increase their investments

Marriott International Inc. (MAR), Starwood Hotels & Resorts Worldwide Inc. (HOT) and Hilton Worldwide Inc. are turning to Africa, where a growing middle class and rising travel are fueling the fastest pace of hotel development in the world.

Marriott, that plans 3,900 rooms at 22 hotels, has increased the number of hotel rooms it plans on the continent by 55 percent from last year. For Starwood, which plans to increase its number of properties in Africa to 50 by 2016 from 38 today, the revenue per available room in Africa and the Middle East is the highest of any region worldwide, the average room rates were $209.87 in the fourth quarter. The high-end Transcorp Hilton Abuja, in Nigeria’s capital, commands some of the steepest management fees in the world for its operator, according to Lagos, Nigeria-based hotel-consulting firm W Hospitality Group, in fact in Abuja, a shortage of high-end hotels combined with rising demand allows Hilton to charge more than $400 a night for its rooms and lets the hotelier collect some of the highest management fees in the world.

Hotel investors and operators, finding growth slowing in mature European and U.S. markets, are expanding in Africa as the continent is buoyed by increasing trade with countries including China and rising demand for services such as lodging. More than half of Africa’s countries probably will post gross domestic product growth of 5 percent annually through 2016.

Ghana: GIPC targets huge investments from Singapore

The Ghana Investment Promotion Council (GIPC) is expecting high volumes of foreign direct investments (FDIs) from Singapore in the coming months, following recent increase in investor interest from that country in the Ghanaian economy.

The Chief Executive Officer of GIPC, Mrs Mawuena Adzo Trebarh, added that the investments were expected to go into light manufacturing, ports and logistics, agriculture as well as the ailing power sector.

Trade between Ghana and Singapore is currently around US$1 billion and FDI inflows amounted to US$250 million in 2012, information from the GIPC showed.

Mozambique: To invest up to $5 Billion in Rovuma Basin

The publicly owned Mozambican Hydrocarbon Company (ENH) plans to invest between 2.5 and 5 billion US dollars as it exercises its rights to participate in the Offshore Area 1 and Offshore Area 4 gas fields in the Rovuma Basin in northern Mozambique.

ENH has a 15 per cent stake in Offshore Area 1 (operated by the US company Anadarko) and a ten per cent stake in Offshore Area 4 (operated by the Italian company ENI). The latest estimate is that these two areas contain 170 trillion cubic feet of natural gas.

The economic model developed by the operators expects that the project will generate a total of 400 billion dollars. From this, the government would receive 119 million dollars from its share of production and from royalties.

Africa: Oil discoveries in East Africa attract West African banks

The recent discovery of substantially large amounts of oil deposits estimated at 2.5 billion barrels in Kenya and Uganda and has come as a shocker to the local banks which are now partnering with investors to exploit the liquid gold. There has been growing interest among investors especially from the West African banks and insurance companies in countries like Nigeria and Ghana. A similar interest in also growing in Tanzania following recent data published by the Ministry of Energy and Minerals on substantial amount of gas estimated at 33 trillion cubic feet. Gold has has also been discovered in the Republic of Tanzania.

South Africa’s banks and insurance companies had identified this opportunity a little more than three years back.

Insurance firms Ghana Re and Nigeria’s Continental Re have launched new wholly-owned firms in Nairobi in the past 12 months, paying more attention to the oil and gas sectors.

Ghana: BOST will build gas storage facility in Kumasi

The Bulk Oil Storage and Transportation (BOST) Company is looking forward to building a gas storage facility in Kumasi for power generation; there are also plans to build an oil pipeline from the Western region to the Kumasi oil depot as part of upgrade and expansion re-engineering to meet the energy needs of the country.

Uganda: exports hit $2.3billion

Uganda’s exports reached $2.3b (5.9 trillion) last year, up from $2.1b (sh5.4 trillion) in 2011, the executive director of the Uganda Export Promotion Board, Florence Kata, has said.

Top Uganda export markets include France for cotton and oil seeds, Sudan, Congo, Kenya, United Arab Emirates, Tanzania, Rwanda and Common Market for Eastern and Southern Africa (COMESA) partner states.

COMESA accounted for 46% of Uganda’s exports, while the East African Community market accounted for 22% of the total export earnings. Kata, however, said last year registered drops in export values for four important sub-sectors – coffee, fish, cotton and cocoa. She said the four sectors earned $590.7m in 2012, down from $678.7m in 2011.

She said that this drop in traditional exports can be attributed to a combination of factors, including the tough economic conditions in Europe, America and Asia which took a negative toll on the country’s exports.

Ghana: Turkish businessmen explore opportunities

A five-member Turkish business delegation which was in Ghana to explore investment opportunities has paid a courtesy call on the Minister of Trade and Industry, Mr Haruna Iddrisu in Accra.

The delegation also toured the Ghana Free zones area in Tema to explore opportunities in the construction, real estate, fertilizer production and manufacture of tomato paste and spaghetti sectors.

The leader of the delegation, Mr Suha Ozkan, who lauded Ghana’s political climate said they were determined to scale up trade between Ghana and Turkey.

South Africa: Union of mineworkers declared wage war

The National Union of Mineworkers (NUM), Solidarity and UASA on Wednesday, the 24th of July, announced that they had declared a wage dispute with the Chamber of Mines. The deadlock has been referred to the Commission for Conciliation, Mediation and Arbitration (CCMA).

NUM said the “dispute comes amid the Chamber of Mines ‘s gold producers having further insulted mineworkers by putting a 1 percent increase, taking their offer to 5 percent”, moreover NUM wants surface workers to earn a minimum of 7000 rand a month, and underground and open-cast workers 8000 rand a month.

Mining remains the backbone of the South African economy.

Rwanda: Government and UN Sign U.S. $400 Million deal

The government and One UN Rwanda have signed a five year agreement aimed at helping the country achieve the Millennium Development Goals, the Economic and Poverty Reduction Strategy (EDPRSII) as well as Vision 2020.

The assistance, worth of US$400 million (Rwf264 billion), is a mid-term strategy running until 2018 under the United Nations Development Assistance Plan (UNDAP), through which the organization seeks to consolidate its support to Rwanda’s development strategies.

The US$400 million budget will be financed through funds that UN agencies will invest from their core and non-core resources, as well as through mobilization efforts headed by the resident coordinator.

UN announced in 2007 that it would explore new ways of enhancing its efficiency at country level, naming Rwanda, Albania, Cape Verde, Mozambique, Pakistan, Tanzania, Uruguay, and Vietnam as pilots in its “One UN” agenda.

Tanzania: Uranium project will attract Sh1.6 trillion investment

The Mkuju River Project (MRP), a uranium mining project in Namtumbo District, Ruvuma Region, is expected to attract foreign direct investment (FDI) amounting to US$ 1bn (about 1.6trillion) over the project’s life. The project is owned by Mantra Tanzania and operated by Uranium One Incorporation.

According to the Chief Executive Officer (CEO) of Uranium One, Mr Chris Sattler, if all goes as planned construction of the project should begin in the next dry season and take two years to complete. Before construction can begin, a nine month detailed engineering and design programme must be completed; moreover he said that uranium produced by the project will be supplied to electrical utilities solely for the generation of electricity.

When operations at the MRP commence, Tanzania would become Africa’s third largest producer of the mineral after Niger and Namibia. Some 1,600 people are expected to be employed during construction and there will be 750 permanent jobs when the mine starts operations. There will be even more indirect jobs created by the Mkuju River Project over its life. At present there are 120 employees who are involved in exploration activities.

South Sudan: Ecobank opens an affiliate

Ecobank Transnational Incorporated, a leading pan-African banking group, has opened a banking affiliate in South Sudan. The new banking affiliate, the 34th on the African continent, offers the opportunity to support the youngest African state in addressing the challenges in regards to its development, the group said in a statement. Ecobank South Sudan started operations on July 10 and it offers the suite of products and services of the group to individuals, small to medium enterprises, multinationals and institutions.

The Togo-based Ecobank Transnational Incorporated is the parent company of the leading independent pan-African banking group, Ecobank. It currently has a presence in 34 African countries, namely Angola, Benin, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Congo (Brazzaville), Congo (DR) , Côte d’Ivoire, Equatorial Guinea, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Liberia, Malawi, Mali, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, South Africa, South Sudan Tanzania, Togo, Uganda, Zambia, Zimbabwe.

Sub-Saharan: World Bank investment rises to $14.7billion

The World Bank Group’s financial assistance to sub-Saharan Africa rose by $2.5 billion in the 2013 fiscal year to a record high $14.7 billion. In a statement issued by the Group, its International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) credits, grants, and guarantees to the region increased by $800 million from the previous year to $8.25 billion.

The International Finance Corporation (IFC) committed a record of nearly $5 billion for private sector development projects in sub-Saharan Africa, its preliminary and unaudited data released July 23, 2013 showed.

About $1.5 billion political risk guarantees were issued by the Bank’s Multilateral Investment Guarantee Agency (MIGA) for projects in the region during the fiscal year which ended June 30, 2013.

The World Bank’s support for developing countries was worth $52.6 billion during the fiscal year.

According to the information, IDA commitments during financial year 2013 reached a record $16.3 billion, IBRD’s commitments totaled $15.2 billion while IFC investments were nearly $25 billion.

The Bank Group’s political risk insurance arm, MIGA, issued $2.8 billion in guarantees during the fiscal year. This included a $500 million financial guarantee for Angola.

Despite the slowly recovering global economy, the World Bank Group indicated that it supported an estimated 1,956 operations across all sectors such as governance, infrastructure, human development and the private sector.

World Bank Group President Jim Yong Kim said “the Bank’s performance has been strong during my first year as President, and we are well positioned to address the economic challenges developing countries face during these still uncertain times.”

Ghana: Fan Milk sees 14% rise in profit

Ghana’s Fan Milk Limited revealed yesterday that its first-half net profit rose nearly 14 percent to 14.85 million cedis ($7.12 million) as against 13.05 million cedis ($6.3 million) a year ago on lower operating costs.

Earnings per share increased to 0.13 cedis from 0.11 cedis compared with the first six months of 2012. However revenue fell to 71.41 million Cedis from 73.31 million cedis, the company said in a filing with the Ghana Stock Exchange.

Fan Milk is Ghana is the leading producer of dairy products including ice cream in Ghana.

Fan Milk International, the leading manufacturer and distributor of frozen dairy products and juices in West Africa, was acquired last month by Abraaj Group. The deal, that is expected to close by November, implies Abraaj would also take majority stake in Fan Milk Ghana Limited. Apart from Ghana, Fan Milk International currently also operates in Nigeria, Togo, Ivory Coast, Benin and Burkina Faso.

The company, which started as a family business more than 50 years ago, currently sells over 1.8 million products daily across West Africa through its fully integrated regional manufacturing and distribution cold chain network.

Ghana: Eurobond oversubscribed by US$1.2 billion

Ghana’s second bid to raise US$1 billion from the international capital market to finance key development projects has been oversubscribed by US$1.2 billion. The first bond of US$750 million was raised in 2007 with a coupon rate of 8.5 per cent and a maturity period of 10 years.

This current bond of US$1 billion has a maturity period of 10 years, with a coupon rate of 7.875 per cent which will be paid semi-annually. The bond will be listed on the Ghana Stock Exchange (GSE) and the Irish Stock Exchange (ISE). This will be the first listing of a sovereign bond on a local stock market in sub-Saharan Africa.

The over-subscription shows the level of confidence the international financial community has in the Ghanaian economy. The economy, over the past year, has received positive ratings from international rating agencies. Moody Ratings rated Ghana B1; Standard and Poor’s B, while Fitch rated the economy B+.

The foreign lead managers for the transaction were Barclays Bank and the Citi Bank Group, while SAS and EDC were the co-managers.

Proceeds from the bond are expected to be used to finance infrastructure projects and restructure maturing debts and interest payments. They are also to be used as counterpart funding for capital projects such as the Atuabo Gas Processing project, as well as to finance capital expenditure approved in the 2013 budget, with priority given to self-financing projects such as ports and power projects.

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